PrimaLoft Technologies reported net sales for the year ended December 31, 2023 were $67.1 million, a decrease of $12.9 million as compared to net sales of $79.9 million for the year ended December 31, 2022. The decrease in net sales during the year was said to be attributable to higher-than-anticipated end-market inventory levels leading to lower ordering from existing customers in the first half of the year.

Parent company Compass Diversified Holding (CODI) expects that retail ordering will begin to normalize in 2024.

Gross margin for 2023 was 62.7 percent of sales, as compared to gross margin of 59.4 percent for 2022. In the prior year, PrimaLoft recorded $0.6 million in amortization of the inventory step-up resulting from the acquisition purchase price allocation. Excluding the effect of the step-up amortization, the gross profit as a percentage of net sales for 2022 was 60.2 percent of sales. Gross margin increased year-over-year primarily due to price increases implemented in the fourth quarter of 2022.

SG&A expense for the year was $19.4 million, or 29.0 percent of net sales, compared to $27.6 million, or 34.5 percent of net sales, for 2022. SG&A expense in 2022 included $5.8 million in transaction costs associated with the company’s acquisition of PrimaLoft. Excluding the transaction costs, SG&A expense decreased approximately $2.4 million due to a decrease in stock compensation and a reduction in marketing costs.

PrimaLoft performed an interim impairment test of their goodwill as of December 31, 2023 as a result of operating results that were below forecast amounts that were used as the basis for the purchase price allocation at acquisition. The impairment test resulted in PrimaLoft recording an impairment expense of $57.8 million in the year ended December 31, 2023.

Segment operating loss for the year ended December 31, 2023 was $57.1 million, compared to segment operating loss of $1.9 million for 2022, primarily as a result of the goodwill impairment recorded in the fourth quarter of 2023.

Fourth quarter sales at Primaloft fell 32.8 percent to $9.4 million, compared to $14.0 million in the prior-year Q4 period. Adjusted EBITDA for the Primaloft business was $1.7 million in the 2023 fourth quarter, down sharply from $4,3 million in the 2022 fourth quarter.

Image courtesy PrimaLoft x Isbjörn of Sweden